Reply by SMS Sim Ann in response to Adjournment Motion by MP Chua Kheng Wee Louis (Sengkang) on “Home Ownership: Supporting Diverse Aspirations Through Rental Housing”

Nov 2, 2021

Madam Deputy Speaker, I thank Mr Chua for laying out his views on housing, and for his suggestions to make our public housing landscape more rental, less ownership.

Since Independence, we have strived to support the diverse aspirations of Singaporeans. In recent years, the Government has been engaging citizens more deeply and extensively, to consult and co-create solutions on issues we all care deeply about. This includes our public housing programme, which is unique and unlike any others in the world.

Home Ownership as a Key Tenet in Public Housing Policy

Home ownership has been the cornerstone of our public housing policy, and a key tenet of Singapore’s social compact. It was an audacious goal – to make it easy for citizens of a young, developing nation to own their homes, to give families stability, develop a sense of rootedness and a concrete stake in Singapore’s progress. Beyond being homes, HDB flats are also valuable assets that can be monetised to supplement their owners’ income during their retirement years.

We have more than achieved this goal. Today, Singapore has one of the highest home ownership rates in the world, at 90%. This compares with 65% in the US, 72% in the EU, and 63% in Australia. More remarkably, around 85% of our low-income households own their homes. This reflects the priority the Government places on keeping home ownership attainable for Singaporeans.

New flats are priced with a generous subsidy, and supplemented with grants for affordability. For buyers considering the resale market, we offer up to $160,000 in housing grants, with the grant structure heavily tilted towards the lower- and middle-income households. For many Singaporeans, these housing subsidies constitute one of the most significant bundles of subsidies that they enjoy.

We have also provided a steady supply of public housing over the years to meet demand, and provide affordable and inclusive public housing for Singaporeans.

Rental Housing Options Provided to Support Home Ownership

While our home ownership rate is high, we recognise that some may not be quite ready for home ownership, and require some additional assistance and support. That is why we provide subsidised rental housing options targeted at specific needs. For low-income households with no other housing options, we provide highly subsidised rental housing under the Public Rental scheme, as a social safety net. The income guideline which Mr Chua has referred to in his speech, is not a hard and fast rule. HDB has and will continue to exercise flexibility on a case-by-case basis where necessary. 

For families who need an interim housing option while waiting for their BTO flats, we rent out flats under the Parenthood Provisional Housing Scheme or PPHS. We also provide Interim Rental Housing for lower-income households who need temporary accommodation while waiting to buy or collect the keys to their own flat, and have no other housing options.

However, given the significant subsidies involved, such rental options are very targeted. Our aim is to help households in public rental eventually achieve home ownership as well.  HDB and social agencies work closely to support rental households in overcoming the various challenges that they face. 

For example, through Community Link, or ComLink, government agencies and community partners work together to support families with young children living in public rental flats, to help them achieve stability, self-reliance, and social mobility.

When families are ready, they can also obtain housing grants and personalised guidance from HDB’s Home ownership Support Team, on budgeting and the flat buying process.

Our home ownership policies also support our family formation policies, which reflects another important aspiration for many Singaporeans. The recent World Values Survey in 2020 showed that families are important to Singaporeans and most want to have children – preferably two.

Changing societal trends may reshape how some Singaporeans perceive home ownership - more Singaporeans are remaining single and may wish to own their own homes too, while some young people who do intend to get married eventually might also desire to live apart from their parents for a few years, as alluded to by Mr Chua.

These are diverse aspirations, and understandably lead to questions about whether our public housing policy can be more flexible in accommodating them.

HDB has moved on singles’ flat ownership. Single buyers have access to housing grants, and can buy smaller BTO units in non-mature estates. While our overall housing policy continues to support families, we recognise the home ownership aspirations that many singles have. For instance, some singles have had to forego opportunities of forming families of their own because of caregiver responsibilities. Seniors who are single also tend to be more vulnerable than those who can count on the support of their spouses, children and even grandchildren. In such cases, home ownership can be material in improving a person’s well-being as well as financial security. We are very mindful of the circumstances of this group and will continue to study ways to assist them.

As for expanding the range of subsidised rental offerings, especially for medium to long term accommodation, we would need to consider this very carefully.

It is common to see young people renting their own apartments in big cities all over the world – but this is largely unsubsidised and subject to market forces.

This phenomenon also reflects different social circumstances. For instance, the city that one works in could be very far from one’s hometown, and hence living with one’s parents is out of the question. In some societies, it is a norm for young adults to move out from their parents’ homes, even if they do not work in a different city.

The rent that such tenants pay is a consumption expense, which could have gone into home ownership, if home ownership was within reach. But without public housing subsidies that support home ownership, some end up renting for many years, or even for life.

Wide Range of Rental Options Available Today

In Singapore, a wide range of open market rental options are also available in HDB and private estates, of varying sizes, locations, and rent levels. Among these offerings, co-living appears to be increasingly popular amongst the younger generation. We have observed more Singaporeans taking up such co-living options, compared to previously where it mainly catered to foreigners. We will continue to study and monitor this trend further.

Why Home Ownership?

Mr Chua suggests that there could still be a gap in the rental offerings today, as there are Singaporeans who prefer to rent instead of own for a certain number of years, but are not eligible for public rental and do not wish to take up open market or private sector options. Mr Chua suggested that HDB rent out flats at rates set at a discount to that of the open market to meet demand from these groups.

We thank Mr Chua for his suggestions. It represents a change in the nature of our public housing policy and is something we would need to consider very carefully, for reasons of principle as well as practicality.

We see the provision of a subsidised rental option as a means towards achieving home ownership, because we believe in the benefits that home ownership brings to Singaporeans.

Members of this House would be aware that we recently launched the new Prime Location Public Housing model or PLH for short. In developing the new model, we embarked on an extensive engagement exercise to seek views from Singaporeans. Many suggestions were raised, including suggestions for the Government to rent out prime location flats instead of selling them as home ownership flats.

We had considered this suggestion carefully but decided not to adopt it for now, for several reasons.  As I’ve shared, we continue to believe in the benefits of home ownership for Singapore and Singaporeans.  Apart from this, without substantial rental subsidies from the Government, most Singaporeans would be unlikely to find it attractive to pay market rent using cash.

Flat owners who purchase a flat of sufficient lease and complete the loan payments are assured of a roof over their heads for the rest of their lives. The same cannot be said for those choosing to rent, as rental payments would continue to recur even after retirement.

We will also need to study the impact of introducing a new supply of rental flats at rates lower than market, which may affect rental rates across the board. The same considerations would apply, if we were to contemplate the provision of subsidised rental options for public housing in the manner that Mr Chua has described.

Madam, MND closely monitors evolving trends and social norms to identify market gaps to cater to the housing needs of our diverse population. For example, we introduced the 2-room Flexi scheme in 2015 as a new housing option to better cater to the diverse housing needs of families, singles, and seniors. For seniors buying 2-room Flexi flats, they have the options to choose from a range of leases, based on their preferences.

Our Public Housing Commitment

Madam, home ownership has been and will continue to be our key housing strategy for Singapore. Beyond just a roof over our heads, home ownership has provided Singaporeans with a sense of stability, security and belonging, and has given us a strong stake in our country’s progress.

Nevertheless, MND will continue to study how Singaporeans’ preferences and aspirations evolve over time, and continue to develop our public housing programme to meet changing needs. That said, mainstream rental represents a significant departure from our public housing policy and principles. It will reshape our social norms and could weaken our communities, because unlike home ownership where people sink their roots, rentals are more transitory. This is not something we will embark on lightly, without deep consideration.

In the meantime, given our limited fiscal space, we will continue to prioritise our resources to support Singaporeans in achieving their home ownership aspirations - that is, homes owned by Singaporeans, and not by private investors through REITS.  Thank you.